Overcoming Barriers to Scale: Institutional impact investments in low-income and developing countries


July 2013

Written by Gabriel A. Huppé and Mariana H. Silva

Executive Summary
Upon reviewing recent reports on impact investing by various organizations, the authors noted that there is conceptual 
appeal for large institutional investors to participate in the impact market. However, due to unresolved barriers, large 
investors such as pension and sovereign wealth funds are unable to participate in this attractive investment thesis of 
the asset class. 
Based on an analysis of the seven key problems facing institutional investors wishing to participate in impact investing, 
we provide a series of recommendations for key industry players and public policy-makers. We propose a focus on 
financial instruments, host regulatory mechanisms and policy initiatives. In particular, we suggest that innovations in 
financial instruments and fund structures may help resolve the primary challenges faced by pension and sovereign 
wealth funds, while government support can help reduce the barriers related to secondary problems. We also discuss 
an ecosystem approach to impact investing and entrepreneurial activity and apply this framework to the Indian 
ecosystem. 
We integrate our various findings and propositions into a framework to evaluate National Impact Investment Readiness 
(NIIR), which can be used by both the financial industry and policy-makers in low-income and developing countries. 
The financial industry can use this framework to assess the “investability” of emerging impact investment markets in 
terms of making an impact in these countries, all while achieving returns that are in line with their fiduciary obligations. 
The National Impact Investment Readiness Assessment (NIIRA) can thus help investors prioritize impact investment 
markets and sectors at the country level. Policy-makers in countries with a national agenda to promote impact 
entrepreneurialism and enterprise-based development can also use the tool.
Readers already familiar with impact investing and institutional investor concepts can skip over Section 1 of this report, 
as it is the context-setting discussion of the impact investment landscape for the sections that follow. Section 2 of this 
report is the product of a comprehensive review of this landscape and recent activities by prominent impact investors. 
In it, we discuss the seven key problems faced by institutional investors when making asset allocation and investment 
selection assessments regarding the impact sector. Table ES1 lists the key problems that need to be overcome to unlock 
greater institutional capital into the impact investment space.

International Institute for Sustainable Development
The International Institute for Sustainable Development (IISD) contributes to sustainable development by advancing 
policy recommendations on international trade and investment, economic policy, climate change and energy, and 
management of natural and social capital, as well as the enabling role of communication technologies in these areas. 
We report on international negotiations and disseminate knowledge gained through collaborative projects, resulting in 
more rigorous research, capacity building in developing countries, better networks spanning the North and the South, 
and better global connections among researchers, practitioners, citizens and policy-makers.
IISD’s vision is better living for all—sustainably; its mission is to champion innovation, enabling societies to live 
sustainably. IISD is registered as a charitable organization in Canada and has 501(c)(3) status in the United States. 
IISD receives core operating support from the Government of Canada, provided through the International Development 
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In this BLOG we will look at pensions and their impact on what are called Public Private Partnerships or P3’s.  IT will also deal with other pension matters, such as Defined Contribution Plans (DC) vs Defined Benefit (DB) PLANS, the weakness in private plans, the need for pension reform in public pensions to have shareholder rights, directorships and ethical investment directives and policies.